The wind, rain and storm surges of Harvey and Irma have barely subsided and already there is talk about the thousands of construction jobs and infrastructure spending that will come as a result.
If previous, even lesser, storms are any indication, rebuilding will take time but as roads, buildings and homes are repaired and raised the infrastructure spending will surely come.
After Hurricane Katrina in 2005, things got off to a slow start but after about 5 months, construction jobs increased about 4%. In the year following the storm Louisiana gained 7,800 jobs an increase of 6.4%.
Hurricane Ike, the 3rd most damaging hurricane in U.S. history, which hit Texas in 2008, year-over-year construction job growth beat the national average for more than a year. Year-over-year construction growth following Hurricane Sandy in 2012 was also positive in New York and even better in New Jersey.
Shortage Of WorkersvOne factor that might slow down construction growth is a nationwide shortage of construction workers. The housing bust of 2008 drove up to 30% of construction workers to seek employment in other fields. As a result, the supply of both skilled and unskilled labor remains low according to the National Association of Homebuilders.
Before Harvey hit Texas, a survey by the Associated General Contractors of America revealed that 69% of contractors were having trouble filling positions. To make matters worse, a federal crackdown on undocumented workers who the Pew Research Center says made up 28% of the construction workforce in Texas has thinned the labor force even more.
Another potential negative comes from victims of Hurricane Sandy who are warning those affected by Harvey and Irma to get ready to be stiffed by Federal Emergency Management Agency through its National Flood Insurance Program (NFIP).
Sandy victims have formed a group called “Stop FEMA Now” designed to pressure lawmakers to change the NFIP program. According to the group, thousands of homeowners affected by Hurricane Sandy still have not been paid 5 years after the storm. Some say they lost their homes by falling victim to NFIP fraud and abuse.
Assuming the problems can be overcome, investors have some decisions to make. With average estimates for Harvey damage alone reaching anywhere from $48 to $75 billion, some companies, along with their stockholders, are going to do well.
Stocks likely to see an eventual uptick include some of the more obvious choices like Home Depot (NYSE:HDC), Lowe’s Companies (NYSE:LOWC) and HD Supply (NYSE:HDC). Others include to benefit from the eventual rebuilding effort include Builder’s FirstSource (NASDAQ:BLDRC) and BMC Stock Holdings (TSX:BMCHC). Other areas to look to include lumber and wood suppliers like Lumber Liquidators (NYSE:LLC); cement and concrete companies such as U.S. Concrete (TSX:USCRC) and wallboard manufacturers like USG Corp. (NYSE:USGC).